Wall Street closed generally lower last week, with only the Dow gaining. The latest data showed inflation is rising, which could lead to more hawkish rate hikes from the Federal Reserve. While some big financial institutions reported solid third-quarter earnings, a few major banks’ earnings were not so positive. Long-term bond prices slid lower, driving yields higher. The dollar continued to strengthen against a basket of currencies. Crude oil prices dipped lower as falling demand more than offset receding output.
Last Week’s Economic News
- In what could support further interest-rate hikes by the Federal Reserve, the Consumer Price Index rose 0.4% in September and 8.2% since September 2021. Prices less food and energy increased 0.6% last month. The September CPI was driven by price increases in shelter (0.7%), food (0.8%), and medical care (1.0%). Price hikes also occurred in transportation (1.9%) and new vehicles (0.7%), Gasoline prices slid 4.9%, contributing to a 2.1% decline in overall energy prices.
- In September, the prices producers received for their goods and services rose 0.4%, following decreases of 0.2% in August and 0.4% in July. For the 12 months ended in September, producer prices have risen 8.5%, down from 8.7% for the 12 months ended in August 2022. Prices for both services and goods advanced 0.4% last month. Prices less foods, energy, and trade services also rose 0.4% in September, the largest monthly increase since May 2022.
- While prices for domestic goods and services rose in September, import and export prices fell for the third consecutive month. According to the latest data from the Bureau of Labor Statistics, import prices, reflecting the strength of the dollar, decreased 1.2% in September after declining 1.1% in August. Export prices fell 0.8% last month following a 1.7% drop in August. Since September 2021, import prices have risen 6.0%, while export prices have increased 9.5%. Import fuel prices fell 7.5% for the second month in a row, although import fuel prices have risen 32.3% from September 2021. Nonfuel import prices declined 0.4% in September. A drop in prices for industrial supplies and materials more than offset higher prices for foods, feeds, and beverages. On the export side of the ledger, prices for both agricultural and nonagricultural exports fell in September.
- Retail sales were virtually unchanged in September from August, but have risen 8.2% for the 12 months ended in September. Retail trade sales slipped 0.1% last month, but are up 7.8% since September 2021. Several retailers saw sales decrease in September, including motor vehicle and parts dealers (-0.4%); furniture and home furnishing stores (-0.7%); electronics and appliance stores (-0.8%); building material and garden equipment and supplies dealers (-0.4%); gasoline stations (-1.4%); sporting goods, book stores, and related retailers (-0.7%); and miscellaneous store retailers (-2.5%). Several retailers saw sales increase in September including food and beverage stores (0.4%); health and personal care stores (0.5%); clothing and clothing accessories stores (0.5%); general merchandise stores, including department stores (0.7%); nonstore, or online, retailers (0.5%); and food services and drinking places (0.5%).
- Gasoline prices continued to increase last week. According to the U.S. Energy Administration, the national average retail price for regular gasoline was $3.912 per gallon on October 10, $0.130 per gallon above the prior week’s price and $0.645 higher than a year ago. Residential heating oil prices averaged $5.332 per gallon on October 10, $0627 above the previous week’s price and $2.048 per gallon more than a year ago. Also, EIA reported that households using heating oil as their primary fuel for space heating will spend 27.0% more this winter than last winter due to higher prices for heating oil, increased heating demand, and colder temperatures.
- For the week ended October 8, there were 228,000 new claims for unemployment insurance, an increase of 9,000 from the previous week’s level. According to the Department of Labor, the advance rate for insured unemployment claims for the week ended October 1 was 1.0%, unchanged from the previous week’s rate. The advance number of those receiving unemployment insurance benefits during the week ended October 1 was 1,368,000, an increase of 3,000 from the previous week’s level.
Eye on the Week Ahead
The Federal Reserve’s September report on industrial production is out this week. August saw production slip 0.2%, although manufacturing output inched 0.1% higher. The housing sector is also front and center this week with the release of the September reports on housing starts and existing home sales. Housing starts rose 12.2% in August, due primarily to a rise in construction of multi-unit properties. Building permits slid 10.0%. Sales of existing homes also fell in August, down 0.4% for the month and 19.9% since August 2021.
Have a nice week!
Sincerely,
Robert G. Carpenter